New Zealand Prime Minister John Key has opened the door to accepting 37 asylum seeker children destined for Nauru, offering a solution to the current immigration standoff through a deal he struck with former prime minister Julia Gillard.

Speaking ahead of a meeting with Prime Minister Malcolm Turnbull this week, Mr Key said it was "potentially possible" for New Zealand to accept any genuine refugees from Australia under the agreement.

Mr Key said it had originally been made because it was "sensible and compassionate".

The High Court recently dashed the hopes of asylum seekers and advocates by ruling that offshore detention was legal, clearing the way for 257 asylum seekers in Australia - mainly for medical purposes - to be send back to Nauru.

"That offer is there. Historically, the Australians have said no but it is part of the 750 allocation that we have and if they wanted us to take people then, subject to them meeting the criteria, the New Zealand government would be obliged to do that because we've given that commitment that we'd do so," Mr Key said.

When asked if this included the children headed for Nauru, he said: "That's potentially possible but it would need to fit within the criteria that they are refugees as defined by the broader category that we take."

In 2013, Mr Key and Ms Gillard agreed that New Zealand would resettle 150 refugees a year from the Nauru or Manus Island detention centres.

Upon coming to power, former prime minister Tony Abbott effectively rejected the arrangement, saying the government's message to people smugglers had to be "crystal clear".

However, Mr Key's comments confirm that New Zealand regards the agreement to be ongoing.

Prime Minister Malcolm Turnbull has so far continued Mr Abbott's policy, saying in October that taking New Zealand up on their offer could "give the people smugglers incentive to get back into business".

When asked about the latest offer from New Zealand, a spokeswoman for Immigration Minister Peter Dutton referred Fairfax Media to these statements from both the Prime Minister and his predecessor.

"There'd certainly be an argument, I think, in that some of the people there need resettling. They are genuine refugees and if that's the case, then I can't rule that out," Mr Key said on Monday, adding there "could well be a humanitarian reason for doing that".

"The scientific evidence is that detention affects the mental state of children. It's deleterious and wherever possible children should not be in detention," he said.

Mr Turnbull will host Mr Key in Sydney on Friday for the annual meeting between the two countries.

The pair are expected to discuss trade, security and the contentious issue of the rights and detention of New Zealanders living in Australia.

Mr Key's comments will place new pressure on Mr Turnbull to pursue a humane resolution to the plight of the asylum seekers rather than insist on the continuation of the Abbott government policy of no exceptions.

Greens senator Sarah Hanson-Young has previously criticised the government for choosing to "dump" asylum seekers in places like Cambodia rather than taking up New Zealand's longstanding offer.

"If the government was actually interested in resettling people and letting them rebuild their lives it would have leapt at this opportunity.

"Instead they have chosen to continue to punish men, women and children for seeking a better life," she said in January.